Research from subscription consulting company Zuora indicates that companies that offer subscription-based pricing plans experienced faster sales growth than those that do not. Zuora also found that companies that offer more payment options, specifically those preferred by their customers, were among the most successful companies in terms of revenue growth.
Stronger Revenue Growth
Zuora created the Subscription Economy Index (SEI) to measure the performance of companies that offer subscription-based products and services. As of the end of 2020, sales for companies in the SEI grew at a seven-year compound annual growth rate (CAGR) of 18.2% versus 3.6% for the overall S&P 500 and 3.7% for retail companies within the S&P 500.
What part do payments have in the growth of companies offering subscription-based products and services?
More Payment Options, Faster Growth
Zuora found that companies that offered more payment options, experienced the fastest revenue growth. For example:
Customization Is Key
While companies offering subscription-based payment options grew their revenue and customer base faster than those who didn’t, businesses that offered more flexible payment options performed the best on those metrics. The key takeaway is that having the flexibility to customize products and services to a customer’s preferences is a factor that may allow companies to differentiate themselves from their competitors and grow their businesses faster.
The subscription-based pricing model may allow companies to offer this flexibility as there are often more points of contact between the customer and companies that offer subscriptions.
The Fount Subscription Economy ETF (SUBS)
The Fount Subscription Economy ETF (SUBS) seeks to provide investment results that, before fees
and expenses, generally correspond to the total return performance of the Fount Subscription
Economy Index. The Index was designed to measure the performance of companies engaged in the business of providing subscription services, i.e., companies that sell products or services for recurring subscription revenue.
SUBS may offer an attractive vehicle for individuals looking to invest in companies offering subscription-based pricing models.
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call 855-425-7426 or visit our website at www.fountetfs.com. Read the prospectus or summary prospectus carefully before investing.
Exchange Traded Concepts, LLC. serves as the investment advisor to the Funds. The Funds are distributed by SEI Investments Distribution Co., (SIDCO) 1 Freedom Valley Drive, Oaks, PA 19456. SIDCO is not affiliated with Exchange Traded Concepts, LLC. or Fount Investment Co. Ltd.
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